Interim Report Second Quarter ended 31 December 2018
(Wisynco) Interim Report to Shareholders The Directors are pleased to present the unaudited financial results for the second quarter ended December 31, 2018, which have been prepared in accordance with International Financial Reporting Standards (IFRS). Revenues for the quarter of $7.1 billion represented an increase of 16% over the $6.1 billion achieved in the corresponding quarter of the previous year. Gross Profit also increased to $2.8 billion or 18.3% over the $2.4 billion achieved in the same quarter of the previous year. Gross Margin of 39.8% was slightly greater than the 39% for the corresponding quarter of the previous year. Selling, Distribution & Administrative Expenses for the quarter totaled $1.5 billion or 12.4% more than the $1.3 billion for the corresponding quarter of the prior year, however, they are in line with the increased revenue. Finance expenses included a loss of $128 million due to the revaluation of our USD deposits as the Jamaican Dollar revalued from a rate of 133.46 at September 30, 2018 to 125.89 on December 31, 2018. During the quarter, management successfully renegotiated lower interest rates on the company s borrowings which should result in approximately J$40 million annual savings. Profit before Taxation for the quarter increased to $941.8 million or 23.9% over the $760.2 million realized in Q2 2017. For the quarter ended December 31, 2018, Wisynco recorded Profits Attributable to shareholders of $775.7 million or 21 cents per share compared to $578 million or 16 cents per share, an improvement of 31% over the corresponding period of the prior year. The Company declared a dividend of 7 cents per share payable to shareholders on record as at February 12, 2019 with a payment date of February 26, 2019. Going forward dividends will be declared semi-annually, with the first interim dividend being in January and the final dividend in July of each year. We commenced sales of Worthy Park spirits brands on November 1, 2018 which include Rum-Bar Rums, Rum Cream and Vodka. The distribution of the Worthy Park packaged sugar commenced on January 1 2019. The Beverage industry, effective February 1 2019, is applying a self-imposed cess of JA$1.00 per bottle to be paid to RPJ (Recycle Partners of Jamaica). This cess is to enable RPJ to move with alacrity in establishing depots to collect and recycle PET bottles. This is a precursor to a planned national deposit refund scheme as mentioned by the Government in recent presentations. Selling prices have been adjusted to offset this self-imposed cess. We thank the Wisynco team for their passion and solid efforts during our second quarter as well as consumers of all Wisynco brands. William Mahfood Chairman Andrew Mahfood Chief Executive Officer
Group Statement of Comprehensive Income Quarter ended 31 December 2018
Group Statement of Financial Position 31 December 2018 Unaudited Unaudited Audited December 31 December 31 June 30 2018 2017 2018 Notes $'000 $'000 $'000 Non-Current Assets Property, Plant and Equipment 6,811,809 5,091,110 6,775,727 Available-for-sale investments 94,370 423,514 215,760 Current Assets 6,906,179 5,514,624 6,991,487 Inventories 2,819,864 1,976,396 2,199,273 Receivables and prepayments 2,793,388 2,562,881 2,302,693 Available-for-sale investments - current portion 395,003-269,530 Cash and short-term deposits 5 3,229,507 3,334,634 3,968,075 Current Liabilities 9,237,762 7,873,911 8,739,571 Trade and other payables 3,053,185 2,153,203 3,873,904 Short-term borrowings 473,093 428,527 376,686 Taxation payable 569,531 346,208 362,940 Net Current Assets 4,095,809 2,927,938 4,613,530 Shareholders' Equity 5,141,953 4,945,973 4,126,041 12,048,132 10,460,597 11,117,528 Share capital 1,192,647 1,192,647 1,192,647 Capital reserve 127,560 124,526 119,946 Translation Reserve 34,765 1,202 30,086 Retained earnings 8,610,590 6,523,321 7,347,482 Non-current Liabilities 9,965,562 7,841,696 8,690,161 Deferred tax liabilities 231,341 213,560 257,430 Borrowings 1,851,229 2,405,341 2,169,937 2,082,570 2,618,901 2,427,367 12,048,132 10,460,597 11,117,528 William Mahfood Chairman Andrew Mahfood Chief Executive Officer
Group Statement of Changes in Equity Quarter ended 31 December 2018 Number of Shares Share Capital Capital Reserves Retained Earnings Translation Reserve Non Controlling Interest Total Equity '000 $'000 $'000 $'000 $'000 $'000 $'000 Balance as at 1 July 2017 3,600,585,424 57,927 116,218 7,377,182 3,233 5,740 7,560,300 Net profit - - - 1,232,550 - - 1,232,550 Unrealised gain on investments - - 8,308 - - 8,308 Exchange differences on translating foreign subsidiary - - - - (2,031) - (2,031) Total comprehensive income - - 8,308 1,232,550 (2,031) - 1,238,827 Transactions with Owners: Dividends Paid - - - (1,068,683) - - (1,068,683) Sale of ordinary shares (Net) 149,414,576 1,134,720 - - - - 1,134,720 Transfer to owners consequent on reorganization - - - (1,017,728) - (5,740) (1,023,468) - 1,134,720 - (2,086,411) - (5,740) (957,431) Balance at 31 Dectember 2017 3,750,000,000 1,192,647 124,526 6,523,321 1,202-7,841,696 Balance as at July 1, 2018 3,750,000,000 1,192,647 119,946 7,347,482 30,086-8,690,161 Net profit - - - 1,544,358-1,544,358 Unrealised gains on investments - - 7,614 - - - 7,614 Exchange differences on translating foreign subsidiary - - - - 4,679-4,679 Total comprehensive income - - 7,614 1,544,358 4,679-1,556,651 Transactions with Owners: Dividends Paid - - - (281,250) - - (281,250) Total comprehensive income - - 7,614 1,263,108 4,679-1,275,401 Balance as at 31 December 2018 3,750,000,000 1,192,647 127,560 8,610,590 34,765-9,965,562
Group Statement of Cash Flows Quarter ended 31 December 2018 Net profit from operations: Six months Six months ended ended 31 December 31 December 2018 2017 $'000 $'000 Continuing operations 1,544,358 1,190,959 Discontinued operations - 41,555 Items not affecting cash: Depreciation 477,785 363,680 Gain on sale of property, plant and equipment (4,994) (2,305) Interest income (41,264) (30,570) Dividend income (941) (646) Interest expense 99,434 100,665 Taxation expense 325,519 380,587 Exchange gain on foreign currency balances 56,626 8,148 Changes in operating assets and liabilities: 2,456,523 2,052,073 Inventories (620,591) (36,014) Receivables and prepayments (490,695) (697,630) Trade and other payables (782,586) (926,883) Cash generated from operations 562,651 391,546 Taxation paid (145,017) (213,193) Cash provided by operating activities 417,634 178,353 Cash Flows from Investing Activities Purchase of property, plant and equipment (516,185) (582,999) Purchase of investments 3,531 (558,591) Proceeds from investments - 611,298 Proceeds from the sale of property, plant and equipment 7,312 5,034 Dividend received 941 647 Interest received 41,264 30,570 Cash used in investing activities (463,137) (494,041) Cash Flows from Financing Activities Interest paid (137,567) (50,839) Dividend Paid (281,250) (1,068,683) Long-term loans repaid (228,000) (269,310) Long-term loan received - 725,000 Proceeds from IPO - 1,134,720 Finance leases repaid (13,710) (20,571) Cash (used in)/provided by financing activities (660,527) 450,317 Effects of changes in foreign exchange rates (51,946) (3,906) (Decrease)/Increase in cash and cash equivalents (757,976) 130,723 Cash and cash equivalents at beginning of year 3,917,663 3,148,381 Cash and Cash Equivalents at end of Year 3,159,687 3,279,104
Notes to the Interim Financial Statements 31 December 2018 1. Basis of preparation These financial statements have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting and should be read in conjunction with the annual financial statements which have been prepared in accordance with International Financial Reporting Standards (IFRSs) and interpretations issued by the IFRS Interpretations Committee (IFRS IC) applicable to companies reporting under IFRS. The financial statements comply with IFRS as issued by the International Accounting Standards Board (IASB). The financial statements have been expressed in Jamaican dollars unless otherwise indicated. The financial statements have been prepared under the historical cost convention as modified by the revaluation of certain financial assets. IFRS 9 The Group Executive Management Committee is in the process of evaluating the impact of IFRS 9 on the financial statements of the Group. The preliminary assessment to date will result in the Group continuing to account for available for sale investments at fair value through other comprehensive income and loans and receivables will continue to be accounted for at amortised cost based on the criteria of the standard. There is no anticipated impact on the accounting for financial liabilities as these liabilities within the Group would continue to be accounted for similar to the existing standard IAS 39 Financial Instruments: Recognition and Measurement. The Group will apply the 'general model' as required under IFRS 9 for debt Instruments other than trade receivables by assessing on a forward-looking basis the expected credit losses associated with its available for sale investments carried at fair value through other comprehensive income. A simplified approach, permitted by IFRS 9 will be used for trade receivables, utilising historical default rates by aged receivables as well as forward looking information to determine impairment IFRS 15 The Group Executive Management Committee has completed the evaluation of the impact of IFRS 15 adoption on the financial statements of the Group. Management's assessment indicates that accounting for contracts with variable consideration such as rights of return, trade discounts or volume rebates were impacted and as a result have made the necessary adjustment to the quarterly financial statements to reflect the impact of the adoption. There was no material impact to the opening retained earnings arising from the adoption of this standard. The accounting policies followed in these interim financial statements are consistent with those used in the audited financial statements for the year ended June 30, 2018. 2. Segment reporting An operating segment is a component of the Group that engages in business activities from which it earns revenues and incurs expenses and whose operating results are regularly reviewed by the chief operating decision maker to make decisions about resources to be allocated to the segment. Operating segments are reported in a manner consistent with the internal reporting to the chief operating decision maker. The chief operating decision maker is the Chief Executive Officer (CEO). The CODM regularly reviews local versus export sales, however, the export sales do not meet the threshold of a reportable segment under IFRS 8 and as such no separate segment information is presented. There are no individual customers that constitute more than 10% of total revenue and the CODM does not review assets on a segment basis.
Notes to the Interim Financial Statements 31 December 2018 3. Earnings per share Earnings per share is calculated on net profit and is based on the weighted average number of ordinary shares in issue during both years. Quarter ended Quarter ended Six months Six months December 31 December 31 December 31 December 31 2018 2017 2018 2017 Net profit attributable to ordinary shareholders ($ 000) 775,700 578,006 1,544,358 1,232,550 Weighted average number of ordinary shares in issue ('000) for the end of the period 3,750,000 3,600,585 3,750,000 3,600,585 Basic earnings per share $0.21 $0.16 $0.41 $0.34 4. Profit from Discontinued Operations The financial performance for the quarter for discontinued operations at 31 December 2017 is as below. Quarter ended 31 December 2017 Six months ended 31 December 2017 $ 000 $ 000 Revenue 147,392 595,457 Cost of sales (97,354) (390,977) Gross Profit 50,038 204,481 Other income 51 1,255 Administration and other expenses (46,608) (180,530) Operating Profit 3,481 25,205 Finance income (2,067) (1,220) Finance costs (1,516) (4,892) Profit before taxation (102) 19,094 Taxation (10) (4,057) Net profit after tax of discontinued operations (112) 15,036 Share of results of associate 8,315 26,519 Profit for the period from discontinued operations 8,203 41,555
Notes to the Interim Financial Statements 31 December 2018 5. Cash and Cash Equivalents Six months ended Six months ended 31 December 31 December 2018 2017 $'000 $'000 Cash and bank balances 1,162,125 1,725,752 Short term deposits 2,067,384 1,608,882 3,229,508 3,334,634 Bank overdraft (69,821) (55,530) 3,159,687 3,279,104 6. Subsequent Events The Directors confirm that there have been no material events subsequent to the end of the interim reporting period that have not been reflected in these financial statements. The Company declared a dividend of 7 cents per share payable to shareholders on record as at February 12, 2019 with a payment date of February 26, 2019. Going forward dividends will be declared semi-annually, with the first interim dividend being in January and the final dividend in July of each year
10 Largest Shareholders of as at December 31 2018 Percentage Units Name of Shareholder Ownership 1. Wisynco Group Caribbean Limited 2,776,183,736 74.0316% 2. ATL Group Pension Fund Trustees Nom Ltd. 54,887,475 1.4637% 3. JCSD Trustee Services Ltd - SIGMA EQUITY 42,514,132 1.1337% 4. Francois Paul Chalifour 37,729,580 1.0061% 5. Devon Hugh Reynolds 35,229,613 0.9395% 6. Guardian Life Limited 29,341,646 0.7824% 7. GraceKennedy Pension Fund Custodian Ltd. 25,877,285 0.6901% 8. Sagicor Pooled Equity Fund 23,913,562 0.6377% 9. SJIML A/C 3119 23,132,836 0.6169% 10. NCB Insurance Co. Ltd. A/C WT160 22,732,309 0.6062% Shareholdings of Directors as at December 31 2018 Directors Direct Connected Parties Total * William Mahfood 2,083,333 2,784,637,536 2,786,720,869 * Andrew Mahfood 2,083,333 2,784,285,236 2,786,368,569 Francois Chalifour 37,729,580 0 37,729,580 Devon H. Reynolds 35,229,613 0 35,229,613 John Lee 0 4,283,333 4,283,333 Lisa Soares Lewis 3,167,600 0 3,167,600 Adam Stewart 0 2,938,936 2,938,936 * These Directors have a beneficial holding in Wisynco Group Caribbean Limited, which owns 74.03% of in addition to other connected party holdings. Shareholdings of Senior Executives as at December 31 2018 Senior Executives Direct Connected Parties Total Christopher Ramdon 2,202,383 0 2,202,383 Andrew Fowles 2,200,300 0 2,200,300 Halcott Holness 2,085,333 0 2,085,333 Jacinth Bennett 1,420,000 0 1,420,000 Tabitha Athey 937,420 0 937,420 N. Craig Clare 776,318 0 776,318 Leilani Hunt 535,059 0 535,059 Rachel Zacca 368,596 0 368,596 Annette Morrison 100,000 0 100,000